Mobile by Sainsbury's: What are they smoking?

About a billion years late to the table, Sainsbury’s, the UK retail giant, has decided to step into bed with Vodafone to develop it’s own MVNO. Tesco, their arch rival, ran away with the retail-giant-owns-the-MVNO-world prize years ago. Every year I’m sure someone, somewhere at Sainsbury’s was forced to dust off the MVNO business plan and do lots of testing to see if the time was right to do anything worthwhile.

Apparently now the time is right.

Oh dear.

Oh dear, dear me.

What have they been smoking?

A huge retail presence does not an MVNO make. Although in fairness it’s important to note that it’s apparently a 50-50 joint venture between Sainsbury’s and Vodafone.

What exactly are they going to do? Try and make money at 10p per minute?

Tesco has long made a reasonable margin by making calls 10p per minute and text messages 5p each. The concept being that if you cared about value (i.e. you do, because you were/are shopping at Tesco) and you trusted the brand, you might as well buy your mobile phone service from them.

Along the way we’ve seen some pretty smart price innovation from Tesco. They’ve got a loyal customer base in the millions.

Sainsbury’s is going to have to bust a significant section of it’s gut trying to get anywhere near a million users. In this economy. In this mobile market. Ooooof.

Still.

Let’s be positive.

There is room for further innovation, particularly if you adopt mobile as a central go-to-market pillar, particularly if you’re keen to use it as a loss leader, or method of discovering more about your customers.

Arguably it would probably be far more profitable to give away free or subsidised mobile service to 20 million customers just so you could mine their (your) data to work out customer locations in real time, mapped against their propensity to purchase, and so on. If you knew the precise location habits of your most valuable customers, aggregated and prioritised by profitable spend, you could do a lot of enhancement to a profit line.

If that’s the master plan, brilliant. Or if it’s a derivation — possibly along the lines of investing heavily now to secure the attention and permission of customers as we move to become highly reliant on the world of mobile banking and mobile transactions, excellent. Fair enough.

But if it’s a bollocks business case — one that depends on buying billions of minutes from Vodafone and then trying to sell billions of minutes to disinterested bored-to-tears customers for a slightly higher increment, then we’ve got an M&S Mobile on our hands.

M&S famously launched then smothered their own Tesco Mobile variant years ago when they realised they had nothing whatsoever to offer. Brand isn’t everything in the mobile world, particularly when you’re competing on “value” — i.e. exactly what everyone else in the industry is trying to do.

There is a bit of space for a £20-all-in style price plan, perhaps with month-to-month flexibility. Or a PAYG style arrangement, where you get absolutely everything thrown in for something like £20. Including basic roaming in Europe. Something like that could get attention in the market.

Maybe the 50:50 joint venture will bring us some fantastic services. I hope it’s not a case of two bored companies trying desperately to try and get a few more customers. You can imagine the chest beating during the negotiations.

Judging by the logo above and the rather shit holding page (www.mobilebysainsburys.com) the project team at Sainsbury’s haven’t had a lot of funds to play with so far. A flipping round circle with ‘mobile’ written on it? In different shiny colours? It looks to me like they’ve had to use their design agency’s basic retainer service (i.e. the agency’s intern’s intern’s sister’s mate’s friend who’s got an old copy of Photoshop on their Mac) to knock something out the door.

If today was the razzmatazz launch you’d have thought the site would at least be a proper holding site, right? You know, ‘leave your email here’, ‘we’re building something special’, ‘standby, 60 days ’til we launch’ or all that jazz. In fairness, the design agency has done a bit of work on the background image of the holding page:

Maybe they’re going to shock us with some exciting … excitement… in the days to come.

Bring it on, I say. I’m all for competition. I just hope Sainsbury’s bring their A+ game to the mobile world.

If you’re curious to see what the rather brief, terse press release looks like from Vodafone, here it is:

Sainsbury’s and Vodafone UK have formed a joint venture to launch Mobile by Sainsbury’s in the UK.

Mobile by Sainsbury’s will be run as a joint venture between Sainsbury’s and Vodafone UK combining Sainsbury’s brand, customer insight and retail distribution with Vodafone’s expertise, technology and network providing mobile services to Sainsbury’s customers both in store and online.

The 50/50 joint venture will be led by a management team of experienced mobile, retail and  marketing experts, made up of key personnel from both Sainsbury’s and Vodafone.

Mobile by Sainsbury’s, which will launch later this summer, will reward customer loyalty, offer great quality value-for-money mobile products together with attractive offers – and of course Nectar points.

Justin King, Sainsbury’s CEO said: “We are delighted to announce this partnership. Together with Vodafone, we’ll be able to develop mobile products and services that represent great value for Sainsbury’s customers.”

Guy Laurence, Vodafone UK CEO said: “Both businesses will capitalise on their respective strengths in this venture to offer an exciting product range to customers.”

Joy.

Arms crossed. But I’m keen to see if they can surprise us all.